Their respective news media claques are ecstatic. They hope the House Budget Committee chairman will help turn the election into a substantive debate on the future of the country.
Maybe. A fight over ideas would be better than the exchange of insults we’ve had up to now. Problem is, the debate is all too likely to focus on the wrong subject.
The country’s actual challenges -- how to rescue a faltering recovery and balance the government’s books over the coming years -- don’t really lend themselves to a Great Debate. They’re too small and easily dealt with. Instead of having that discussion, the U.S. will be arguing about whether it wants to be Europe, or believes in fairness, or individual responsibility, or markets, or governments. When the election has settled that quarrel for a day or two, the faltering recovery and looming fiscal breakdown will still be there.
America reminds me of a broken marriage. The spouses fight over everything on principle. There’s no such thing as a trivial disagreement. They fight over whether to set the thermostat at 72 or 76. They could compromise on 74, but they know temperature’s not the real issue. The same goes for balancing the checkbook and loading the dishwasher. Deeper questions about the purpose of the marriage and the history of all previous grievances need to be confronted every time an empty milk carton is put back in the fridge.
If you’re in a broken marriage you can always get a divorce. In the case of an entire country, that’s a highly undesirable outcome. A Great Debate doesn’t always help, especially if it’s between enemies rather than friends.
It shouldn’t be hard for Democrats and Republicans to agree on critical aspects of short-term and long-term fiscal policy. In fact, they already did. The Bowles-Simpson commission issued its recommendations with a bipartisan majority, albeit not the supermajority that would have triggered congressional action. Its approach was sensible: Support the recovery by maintaining fiscal ease in the short run, while making credible plans now to curb borrowing in the longer term.
My suggestion would be to extend all the Bush tax cuts and maintain elevated levels of public spending for at least another year. Then balance the books by boosting revenue (reversing all the Bush tax cuts or undertaking a comprehensive base-broadening tax reform) and cutting spending (in part by raising the retirement age).
Such a deal should be easy to reach, given a particle of goodwill on both sides and any desire to solve the twin fiscal problems rather than inflame them for political purposes. As it happens, Barack Obama’s administration has rejected the Bowles-Simpson recommendations, and so has the Republican leadership. Ryan, who was a member of the commission, voted against its findings.
Ryan’s arrival on the Republican ticket does advance the prospects of a useful discussion in at least one area. The centerpiece of his budget plan is Medicare reform. It’s well understood that Medicare spending needs to be contained lest its growth, under the pressures of demography and new medical technologies, crowd out other public spending or push taxes way up.
The Obama administration aims to curb Medicare spending without radically recasting the program. The Affordable Care Act has many provisions aimed at improving the incentives for cost control. It has started test projects to see what might work.
Ryan’s plan calls for something more drastic: a shift to “premium support,” in which beneficiaries get a payment that lets them choose between private plans and a public option (that’s right: what many Democrats wanted the ACA to provide). It’s a hybrid of the “defined benefit” and “defined contribution” models, because it would guarantee a payment large enough to buy an approved plan. Beneficiaries would pay extra only if they chose a more expensive option.
Ryan’s plan relies on competition among insurers to curb costs, Obama’s on more effective central control. Each has its pros and cons. I prefer Ryan’s approach, but in any event this is the kind of disagreement where debate can shed light on choices and get a better result. The crucial thing is that both sides agree that Medicare must be reformed, and that the question is how.
When you turn to fiscal policy more broadly, there’s no such starting point.
As the Great Debate begins, the administration’s only nonnegotiable priority is to reverse the Bush tax cuts for the rich. The White House says it’s willing to do this even if it means going over the fiscal cliff and raising everybody’s taxes. So much for supporting the recovery. Meanwhile, Obama still hasn’t got around to a plan for long-term deficit control.
The Republicans are just as bored by fiscal balance. Their proposals have nothing to do with fiscal conservatism, which is about matching revenue to spending. They simply want to cut both spending and taxes as quickly as possible. A Romney-Ryan White House would leave deficits in place for decades and add trillions more to the U.S. public debt.
In the battle of big ideas, the Democrats stand for justice. Justice comes first, so they might have to take a chance with the recovery. The Republicans’ big idea is freedom. You don’t trade freedom for temporary stimulus and sound public finance.
Well, let’s debate this by all means. What fun. I’m as excited as the next guy that this election will finally bring closure on balancing freedom and justice. I just wish in the meantime we could have a recovery that isn’t crushed by short-term spending cuts and tax increases, and a long-term public debt profile that doesn’t lead to ruin.
(Clive Crook is a Bloomberg View columnist. The opinions expressed are his own.)
Today’s highlights: the editors on how the private sector can help reduce unemployment and on why a carbon tax still makes sense; William Pesek on Japan Airlines Co.’s $8.5 billion initial public offering; William Dudley on why money-market funds should restrict redemptions by investors; Adam Kirsch on the Tea Party and the novel “Burr.”
To contact the writer of this article: Clive Crook at firstname.lastname@example.org.
To contact the editor responsible for this article: Mark Whitehouse at email@example.com.